Superb, concise and clear (as always). and a great piece to reference to for further readings.
If I may suggest a different point of view to your question: are the spreads getting substantial enough to potentially make battery storage systems profitable in the day-ahead market?
What if we consider the investment in smart BESS, be it bi-directional EV or stationary home or community BESS as a hedge against spreads and volatility, rather then waiting for a cost signal? I see the latter narrative evolving faster then the pure power market economics. Consequently, there will be sufficient capacity added, but for a different reason.
Yes, fair analysis but only within the framework of the current marginal market system. The assumption is that a salami slicing approach i.e. batts will solve, mostly, the PV problem, is not unreasonable. But it ignores a reality, it’s not just PV that is developing, wind is as well. Two things about wind: output correlates @ up to 600km (so if it is windy in Denmark this can extend to Nroth Germany and Benelux) and there is less in summer and much more in spring, autumn and winter. The problem is bright windy days: spring and autumn. Batts can do something about PV, they lack the capacity to absorb wind. Thus the analysis is narrow and the solution (batts) is both short term and not scalable. Back in 2020, one could see the problem starting to develop in Spain (couple of hours of low/negative prices) now we have seen 10 – 12 hours of low prices & the Spanish reality of 2020 is now the Dk/NL/BE/DE reality of 2025. The current marginal market model, reached the end of its useful life in circa 2020. What is happening now is a failure to recognise this. Fundamental market reform is needed and marginal markets need to be dumped asap.
There is also a total failure to recognise what is happening: an electrical power system composed of generation and load (which is statistical) requires determinism somewhere in the system. If the generation is mostly stochastic (increasingly the case with the move to PV and wind) then the determinism has to come from storage (load flexibility only tickles the problem). Batts cannot scale to the size of the problem (which in the case of DE will be TWh by 2030 – 2035).
Great analysis as always. I agree with the sentiment. I can see most new solar projects being a standard battery sizing to ensure that it’s not exporting during the worst 2 hours capture rate and expanding to worst 4 hours as well. And in winter capturing the wind spread.
Great and illustrative post
Superb, concise and clear (as always). and a great piece to reference to for further readings.
If I may suggest a different point of view to your question: are the spreads getting substantial enough to potentially make battery storage systems profitable in the day-ahead market?
What if we consider the investment in smart BESS, be it bi-directional EV or stationary home or community BESS as a hedge against spreads and volatility, rather then waiting for a cost signal? I see the latter narrative evolving faster then the pure power market economics. Consequently, there will be sufficient capacity added, but for a different reason.
Great article as always 🙂
Just wondering how quick these investments might result in canibalization of prices and flattening of “Duck” curve.
Yes, fair analysis but only within the framework of the current marginal market system. The assumption is that a salami slicing approach i.e. batts will solve, mostly, the PV problem, is not unreasonable. But it ignores a reality, it’s not just PV that is developing, wind is as well. Two things about wind: output correlates @ up to 600km (so if it is windy in Denmark this can extend to Nroth Germany and Benelux) and there is less in summer and much more in spring, autumn and winter. The problem is bright windy days: spring and autumn. Batts can do something about PV, they lack the capacity to absorb wind. Thus the analysis is narrow and the solution (batts) is both short term and not scalable. Back in 2020, one could see the problem starting to develop in Spain (couple of hours of low/negative prices) now we have seen 10 – 12 hours of low prices & the Spanish reality of 2020 is now the Dk/NL/BE/DE reality of 2025. The current marginal market model, reached the end of its useful life in circa 2020. What is happening now is a failure to recognise this. Fundamental market reform is needed and marginal markets need to be dumped asap.
There is also a total failure to recognise what is happening: an electrical power system composed of generation and load (which is statistical) requires determinism somewhere in the system. If the generation is mostly stochastic (increasingly the case with the move to PV and wind) then the determinism has to come from storage (load flexibility only tickles the problem). Batts cannot scale to the size of the problem (which in the case of DE will be TWh by 2030 – 2035).
Great analysis as always. I agree with the sentiment. I can see most new solar projects being a standard battery sizing to ensure that it’s not exporting during the worst 2 hours capture rate and expanding to worst 4 hours as well. And in winter capturing the wind spread.
Very good description. Thanks for the insight to rapidly evolving markets.